Work out exactly how many months of cash you have left, your net and gross burn, and how efficiently you're turning that burn into recurring revenue.
Current cash balance.
Cash collected per month.
Total monthly cash out.
Optional — for burn multiple.
How trimming net burn from its current level extends the months you have left.
| Burn change | Net burn / mo | Runway |
|---|
Burn rate is how fast you spend cash; runway is how long that cash lasts. They're the two numbers that decide your timeline — when you need to be profitable, or when you need to raise.
Net burn (expenses minus revenue) is the one that matters for survival. Watch it alongside your burn multiple, which tells you whether the cash you burn is actually buying durable recurring revenue.
Runway = Cash / (Expenses − Revenue) Example: $600K cash, $50K net burn:
Most founders aim to raise enough for 18–24 months. It buys time to hit the milestones that justify the next round.
Begin your raise with 6–9 months left. Fundraising takes longer than you think, and desperation is a weak negotiating position.
Under 6 months is the red zone. Cut burn, accelerate revenue, or close a round — and ideally never let it get here.
Runway is your cash in the bank divided by your net monthly burn. Net burn is monthly expenses minus monthly revenue. If you have $600,000 in the bank and burn $50,000 net per month, your runway is 12 months. If revenue covers expenses, you're cash-flow positive and runway is effectively unlimited at current rates.
Gross burn is your total monthly cash outflow — every dollar leaving the business. Net burn subtracts revenue: it's what you're actually losing each month after the cash customers bring in. Net burn drives runway. A company can have high gross burn but low net burn if revenue is strong, which is a far healthier position.
The common rule of thumb is to raise enough for 18–24 months and start your next raise with 6–9 months left, since fundraising takes time and you never want to negotiate from a position of desperation. Below 6 months of runway is a danger zone. The right buffer depends on how predictable your revenue and costs are.
Burn multiple measures capital efficiency: net cash burned divided by net new ARR over the same period. It tells you how many dollars you burn to add one dollar of recurring revenue. Below 1x is elite, 1–2x is healthy, and above 3x is a warning sign. Enter your net new ARR above to see yours.
Coined by Paul Graham, default alive means that at your current growth and burn, you'd reach profitability before your money runs out — without raising again. Default dead means you wouldn't. It's a sharper question than runway alone: it forces you to ask whether your trajectory, not just your bank balance, reaches the other side.
Three levers: cut burn (reduce costs, especially the largest line items), grow revenue (acquisition, expansion, and reducing churn), or raise capital. Collecting annual contracts upfront also helps — it pulls cash forward, lifting your bank balance and improving free cash flow without changing recognised revenue.
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